As part of the Legatum Institute's 'Transitions Lecture Series', organised in partnership with the National Endowment for Democracy’s International Forum for Democratic Studies and World Affairs
business leader and former government advisor Mondher Ben Ayed
analyses the economic challenges of Tunisia
The January 2011 revolution in Tunisia provided the opportunity for the birth of the first democracy in the Arab world. But if Tunisia is to make a successful transition to democracy its government must meet the economic expectations of its citizens. This paper describes the economic challenges facing Tunisia in the context of the country’s recent history, and offers an outlook on the way ahead.
This paper was published as part of a joint 'Transitions Lecture Series' organised by the Legatum Institute, the National Endowment for Democracy’s International Forum for Democratic Studies, and World Affairs.
- The Dynamics for Transition in Tunisia [PDF]
- By Mondher Ben Ayed
- June 2013
- Published by the Legatum Institute In association with the National Endowment for Democracy's International Forum for Democratic Studies and World Affairs
BACKGROUND ON THE ECONOMY
Despite some bad management and leadership decisions, Tunisia’s macroeconomics have been relatively healthy in recent years. In the five years prior to the revolution, the Tunisian economy achieved an average annual growth of just under 4.5 percent. Inflation was slightly higher than 3 percent, the budget deficit was less than 3 percent, the debt to GDP ratio was near 50 percent, and the GDP per Capita was around $4,0005.
The Tunisian economy is quite diversified. Since independence in 1956, tourism and textiles have been the most important industries. Since the establishment of a free-trade agreement with Europe in March 1998, the country has also developed an electro-mechanical and automotive industry, food industries, high value-added IT, and aerospace industries. European investors own many of the key companies that cater to the EU market. In fact, Europe is the primary trading partner of Tunisia, capturing around 67 percent of the total foreign-exchange volume of goods and services.
Tunisia does not possess significant natural resources. Minimal phosphate mines in the south and a few small oil and gas deposits do not cover the country’s energy needs. Tunisia’s wealth consists mainly in its educated and highly qualified workforce. The country invested heavily in education after independence. With a literacy rate of 80 percent, Tunisia stands as one of the most advanced countries in Africa in terms of education. As early as 2011 about 3 percent of the population was attending a university or college, and today we can estimate the number is higher.
Relative to its neighbours, Tunisia has excellent infrastructure, as well as established labour unions inherited from the colonial French period. The latter played a decisive role during the revolution. By any standard, women enjoy equal opportunities, and women play an important role in the economy. Approximately 25 percent of the workforce is female, and in some professions, such as pharmacists, the number exceeds 50 percent. More than 50 percent of university students are women.
Before 2011, Tunisia seemed—on the surface—as if it were well positioned to continue its transition from a state-controlled economy to a functioning free-market economy. This raises intriguing questions concerning the roots of the revolution.